In 2009, the National Energy and Technology Laboratory (NETL) awarded a $14-million cooperative agreement to a company called North American Power Group Ltd. (NAPG) to collect and analyze carbon data and to design and implement carbon sequestration wells in Wyoming. NAPG's owner, Michael Ruffatto, represented the company and authorized its invoices. Between 2009 and 2012, he billed NETL some $5.7 million for project-related costs.
Those claimed costs were fraudulent. Instead of project-related costs, Ruffatto billed for his legal fees, jewelry, car payments, international travel and other personal expenses.
This went on until the Department of Energy discovered the fraudulent claims in 2012.
"The money allocated by Congress for the National Energy and Technology Laboratory is designed to fund the important mission carried out by the laboratory, not to be diverted for personal use," fumed an acting assistant attorney general for the Justice Department's Civil Division, which achieved the settlement.
The government sued under the False Claims Act, and NAPG and Ruffatto have now agreed to settle the allegations for $14.4 million. In addition, Ruffatto has pled guilty to one felony count of intentional submission of false claims against the United States. He has been sentenced to 18 months in prison, along with three years of supervised release and a $50,000 fine. He has also been ordered to pay $2 million in restitution.
The U.S. attorney handling the case said that the $14.4-million settlement is the largest NETL-related settlement in the history of western Pennsylvania, where the NETL is located.
The Department of Energy's Office of Inspector General also participated in the investigation and settlement. The acting inspector general stated that the office is "committed to ensuring the integrity of Department subcontractors by detecting and holding accountable those who choose to abuse their positions of trust while attempting to hide behind sophisticated fraud schemes."
If your company handles government contracts, you may be in a position to notice fraud, waste or abuse against the government. If you have, you should know that you could obtain a substantial reward for blowing the whistle. The False Claims Act allows private citizens to file whistleblower claims on behalf of the government. If the claim is successful, the whistleblower receives a percentage of whatever recovery is made.
Before you blow the whistle, however, it's important to protect your rights and your reward by ensuring that you file your claim correctly. Talk to a lawyer familiar with whistleblower law.